Although public-private partnerships (PPPs) for transportation infrastructure are often portrayed as losing propositions for the public, the private partner is sometimes on the losing end of the deal as well.

As reported in an article in Bloomberg Businessweek, the private partners that won the right to operate the Indiana Toll Road with a $3.8 billion bid were $209 million short of their break-even point in 2010. In order to cover their costs the private partners were hoping to see 11 million trucks on the toll road each year but only received half that traffic in 2010. In fact, the private partners on the project have failed to make a profit in any of the last 5 years. The State of Indiana, however, has done quite well on the deal, having received $3.8 billion upfront and avoided the outlay of $100 million in operating costs each year.

Despite the poor returns on their investment, Cintra and Macquarie Investment Group, the two primary private investors in the project, claim that they do not expect a default. Patrick Rhode, president of corporate affairs for Cintra US, noted in Public Works Magazine, that the Indiana Toll Road project will continue to fulfill all of its financial obligations and payments and that even if the project were to default, the state would still benefit by being able to take over the project at a fraction of the cost.

The difficulty of calculating the risks for this type of major public-private partnership, particularly in light of the painful lesson being learned by the investors in the Indiana Toll Road, may dampen interest among investors for similar projects in the future. In addition, although the State of Indiana has benefited from this PPP, the uncertainty involved in these types of projects should make both the public and private actors in these agreements tread more carefully in the future.